What does it mean to own a property that has tenants?
If you are the owner of a house, flat or other type of residential property in the UK that someone else lives in and pays you monthly rent to do so, then they are a tenant and you are a landlord, as Finbri’s website explains.
There are almost countless landlord and tenant homes throughout the country, whether that’s in city centres, suburbs, the countryside and elsewhere. But there might come a time when you decide that you want to sell the property, and if that’s your current situation there are a number of important issues to consider – including the rights that your tenants might have.
Keep reading to learn more about the potential hurdles involved with attempting to sell this type of property, as well as steps you might be able to take to streamline the sale of the home.
You’ll also get detailed advice on your various options for how to find a buyer for this type of property, including information on the average amount of time that all of the selling methods can take, whether or not they charge commission, and a number of other important factors.
It’s important to acknowledge your tenants’ rights when selling
You and your tenants will have signed a rental agreement before they moved in, and this will give them certain rights and responsibilities. It’s important that you acknowledge and respect these legally binding terms of the tenancy agreement before trying to sell your investment property.
Because you are the owner of the house or flat that the tenants are living in, you have the right to put it on the market whenever you want. However, the existing tenants’ rights can create some potential hurdles that might complicate how quickly and easily you can sell your home.
The very first step you should take when you know you want to sell is to inform your existing tenants. Most rental agreements have a provision that says how much notice landlords must give tenants that the property is being sold and the agreement is coming to an end. This is typically 60 days but it can be more or less time depending on the terms of the agreement.
One outcome might be that you are planning on selling the home to a new landlord who will simply give the existing tenants a new agreement or take over your agreement. But it can be difficult to find such buyers, as such sales have a very limited market.
Steps you can take to make the process of selling your tenanted home easier
Hopefully, you have a good relationship with your tenants and they will understand that you want to sell, and that you will grant them the full notice period before they have to move.
You could offer to let your tenants stay until you find a buyer, because their rent payments will give you some monthly guaranteed extra cash while the home is on the market. Because the property market can be unpredictable, your home could be up for sale for a long time. Take a look at property websites like Rightmove for recent news about house and flat sales in your area, as well as to get a general idea of sale prices.
Keeping your tenants happy during a sale is important because you might be holding viewings where buyers come to see the place. Happy tenants are likely to keep the place in great condition, whereas problem tenants might deliberately make the house look messy and unattractive to buyers as retaliation for your decision to try selling.
Just as you have the right to give your tenants notice to move out, they also have the right to stay for the duration of that notice period. If you already get on well with your tenants – and they do not have any major issues with prospective buyers coming for viewings – you should acknowledge and grant their right to stay in the home until the notice period expires.
In the event you do have a problem tenant who refuses to leave, you can start the process for serving them a Section 21 notice to vacate the premises. But if they still won’t leave you might be stuck with having to launch a legal fight to get them evicted before you can sell.
Four options to seek a buyer for your property with tenants
Regardless of whether your tenants are aiming to stay in your property after you sell it, you will still need to decide on which strategy to use in order to find a buyer for the house or flat. The usual choices are selling to a quick home buyer like LDN Properties, selling using the services of an estate agent, trying to sell without an assistance or selling through an auctioneer.
Just note that the four methods can vary widely in terms of how long they take, whether they charge commission and other important considerations. As an example, if you sell using the services of an auctioneer or an estate agent then you will need to pay them commission and this will be taken out of the final sale proceeds, adding to your expenses. But if you sell on your own or to a zero-fee quick buyer like LDN Properties then you can avoid paying commission.
It can be helpful to think of your top priorities with selling your property, including your goal sale price, whether or not you are open to paying fees on the sale, and how fast you want to find a buyer. Then compare all of these factors against the specific information about the various selling methods that you have available, and this should identify the best match to your needs.
Selling to a quick home buyer
LDN Properties and other quick buyers have the funds available to purchase all types of leasehold and freehold homes immediately, and they can usually complete the process of buying a home within a few short weeks – including the final steps of exchanging contracts and paying the seller the full proceeds. They can move so swiftly because they do not have to wait to first get approved for a mortgage to pay for the purchase, which can take weeks or months.
Another advantage of selling to a quick buyer is that the honest companies will never charge you commission when purchasing your property, so you can count on receiving the full sale proceeds. That compares favourably to selling through an auctioneer or an estate agent, as both would charge you commission that will be subtracted from the eventual sale proceeds.
A quick buyer can also be a great choice when trying to sell a home with tenants because these businesses make fair and competitive offers to buy properties no matter their age, condition, location, shape, size or type, and regardless of whether the home has any structural damage, legal disputes or other issues that other buyers may consider to be dealbreaking problems.
By way of example, since launching in 2003, LDN Properties has made many purchases and offers throughout the UK that includes not only tenanted homes but also houses near a mineshaft, properties once owned by a hoarder, listed buildings, Laing Easiform homes, penthouse flats, properties that have a regulated tenancy, houses with a bad roof, homes without an Energy Performance Certificate and other scenarios.
For your extra reassurance when selling a tenanted home this way, you can ask specific companies if they can prove they are registered with a third-party organisation known as The Property Ombudsman (TPO). This entity writes rules to protect homeowners against fraud in the quick buying industry, and all true TPO members – like LDN Properties – must commit to following these regulations. Never sell to a non-TPO member because it might be a scam.
To find out whether a company is genuinely registered with TPO, you can visit the organisation’s website and on the welcome page click on “Find a Member” and then type in the name of the business. If they are legitimately registered with TPO then you will be able to see their full membership details, whereas you’ll get no results if the company doesn’t belong to TPO.
Selling with an estate agent
Alternatively, you could get in touch with an estate agent about selling your property. They will first create a listing that describes the home’s main features and includes photographs of the inside and outside, and then advertise this online, in their office and in local newspapers. They’ll arrange viewings for people to tour the property, and hear offers from buyers, with the aim of getting one of these offers through to the last step of exchanging contracts.
Expect an estate agent to charge you commission if they are able to sell your home, and this is often within a range from 1.15 percent to 1.40 percent of a house or flat’s final sale price. The fee is subtracted right away from the sale proceeds, which will increase your expenses. And beware that some estate agents may charge a rate even higher than 1.40 percent.
You must be prepared to potentially wait a very long time to sell when you use an estate agent, and it might be many months or even more than an entire year before you get a serious offer. For those owners trying to sell as fast as feasible, you should review other strategies, such as selling to a quick home buyer like LDN Properties, as that will only take a few short weeks.
It’s also important to learn that a buyer can make an offer with your estate agent but then later change their mind and cancel the offer, which will cause the sale to fall apart. This would add much more time to your selling schedule because you would then have to start over with seeking a buyer. And unfortunately there is nothing that you can do to penalise someone for making and then withdrawing an offer, unless you have already exchanged contracts.
Selling without any help
Another way to sell a home with tenants is without any help, and this means that the owner is responsible for all the tasks required to find a buyer, as Ideal Home says. You will need to create a listing and advertise, followed by scheduling viewings and then hearing offers, aiming to get one to exchanging contracts.
Be prepared to spend a lot of time and energy on selling this way, as it is nothing something you can put off to only doing in your free time. The effort required helps to explain why this is only usually an option pursued by people that have sold properties in the past, or that have a suitably qualified friend or family member that is willing to assist with the sale at zero charge.
It can take a very long time to sell a property on your own, and it might be many months or even more than a full year before you get an offer. Even then, the person that made the offer may change their mind and cancel it, which would make the sale fall apart. This would extend your selling schedule even further because you will have to begin again with looking for a buyer. And unless you have exchanged contracts, the person can’t be penalised for doing this.
Perhaps the only prominent benefit of selling without any help is that you will avoid the requirement to pay commission to an estate agent or an auctioneer for selling your property, so this helps with reducing your total costs. But you could discover that any saving you make this way is cancelled out by the funds you will spend on marketing your listing and other tasks.
But you can achieve the same result of not paying any fees yet with a much speedier and less stressful sale by instead contacting a quick buyer like LDN Properties. These companies promise to never charge owners any commission when buying their homes, and they also can complete the purchase of most properties within a few short weeks – and this covers the vital last steps of exchanging contracts and paying the seller the full proceeds.
Selling at a property auction
Another way to attempt selling a property is at an auction, where people can place bids of increasing value on the home, and the highest price bid at the end of the auction is the winner and therefore will buy the property. Note that this bid is a binding legal agreement to sell the home, and the bidder can sue you to enforce the sale if you attempt to walk away from it.
This is why you need to choose a reserve price – the lowest value at which you agree that your property can sell – that should generate some profit from the sale, even after subtracting the auctioneer’s fees. If you do not, you create the risk of only breaking even on the sale by selling at a price close to what you paid for the home or even potentially selling it at a loss.
To help with calculating your reserve price, it can be helpful to know that the typical auctioneer will charge commission at about 2.5 percent of a property’s sale price, and this will increase your expenses because it will be taken out of the sale proceeds right away.
You might find that some auctioneers are open to reducing how much they commission they will charge you, or having the buyer pay a share of your costs, so it’s worth asking about whether either of these outcomes might be possible, as it can help reduce the total expenses. But if you want to avoid fees altogether, consider selling to a zero-commission quick home buyer.
Auctioneers charge this fee to cover the cost of their work, which involves putting together a listing for the property, advertising it, hosting the auction and finalising a successful sale.
Selling through an auction is not a rapid process because there is a lot of waiting involved, including many weeks or even months from the day that you select this selling option through to the day that the auction happens. And if your home sells at the auction, the buyer then has about 28 days to sign all the legal documents and finish their other tasks needed to complete the purchase, which will extend your overall selling schedule much further.
Some auctioneers could be open to setting a shorter deadline for the buyer to do these tasks, which can help with speeding up the sale, so you should inquire about this. Just note that other auctioneers might allow the buyer even more time than 28 days, making a sale even slower.
Tenants’ rights when selling – seven popular queries and our answers
If you are selling a house with sitting tenants, you might have some questions about what to do. Here are some queries we have received, and our responses:
No. There’s nothing stopping you from seeking a buyer for your house or flat even if tenants are currently living in it. But you must give them notice that you plan to sell if you intend to sell with vacant possession, which will start the clock for them moving out. The duration of this notice will be specified in your rental agreement and is typically about 60 days.
No. In fact, some landlords who sell their building with existing tenants in it will try to find another landlord to buy the property and then transfer the property and rental agreements to them. The downside is that there’s a very limited number of such buyers looking for such properties, so you might struggle to sell your home with this option.
You should strongly consider contacting a fast property buying company, because they are focused on giving fast cash offers to homeowners with the promise of a quick and no-hassle sale. Another advantage of selling to certain of such companies is that they don’t charge sellers fees, so you’ll keep all the proceeds from the sale.
The simplest and best action you can take when trying to sell a flat or house that has tenants is keeping them as happy as possible, so that they are cooperative if potential buyers come to tour the property. One way that you can do this is by promising to let them continue to live in the home for as long as their tenanted agreement allows, until you manage to find a buyer.
Usually, you can choose from among four methods for selling a property, and these are trying your luck with an auction, enlisting the help of an estate agent, selling without any third-party assistance or selling to zero-commission quick buyer. You should carefully review the details of all four methods as they range based on key factors like cost, time taken and more.
You could sell the property to a quick buyer, because the legitimate companies such as LDN Properties will never charge owners any commission when purchasing their homes. That compares to selling through an auctioneer or an estate agent, which are two methods that will charge commission on the sale and this fee will be subtracted from the final proceeds.
A good step to take is asking individual quick buyers to prove if they are registered with The Property Ombudsman (TPO) – this is an independent entity that issues policies to shield owners from scams in the industry. All TPO members such as LDN Properties are required to commit to these regulations, so that should provide peace of mind when selling to them.
Call LDN Properties to sell your home with tenants
We launched our fast property buying business in 2003 and in the years since have bought many houses and flats even when tenants were still living in them. We can give you the same chance to get a swift and competitive cash offer on your tenanted home through a zero-stress process, and we will never charge you any fees. Learn more by calling 020 7183 3022 and talking to our team of experts. Or click on "Request Offer" and we will be in touch quickly.
